EX-99 2 jd1-31ex99_1.txt 99.1 EXHIBIT 99.1 EXECUTION COPY LEHMAN COMMERCIAL PAPER INC. LEHMAN BROTHERS INC. 745 SEVENTH AVENUE 745 SEVENTH AVENUE NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10019 January 4, 2006 COMMITMENT LETTER PERSONAL AND CONFIDENTIAL Gentiva Health Services, Inc. 3 Huntington Quadrangle, Suite 200S Melville, New York 11747 Ladies and Gentlemen: This commitment letter agreement (together with all exhibits and schedules hereto, the "COMMITMENT LETTER") will confirm the understanding and agreement among Lehman Commercial Paper Inc. ("LCPI"), Lehman Brothers Inc. ("LEHMAN BROTHERS" OR THE "ARRANGER") and Gentiva Health Services, Inc., a Delaware corporation (together with each of its subsidiaries, the "COMPANY"), in connection with the proposed financing for the acquisition of all of the issued and outstanding common stock of The Healthfield Group, Inc., a Delaware corporation (together with each of its subsidiaries, the "ACQUIRED BUSINESS"). We understand that the Company proposes to sign an agreement (the "ACQUISITION AGREEMENT") to acquire all of the issued and outstanding common stock of the Acquired Business (the "ACQUISITION"). The date on which the Acquisition is consummated is referred to as the "CLOSING DATE." You have advised us that the total funds needed to finance the Acquisition (including the Company's fees and expenses (which will not exceed $22.0 million) and the refinancing of the existing debt of the Acquired Business) will be approximately $482.8 million and that such funds will be provided from the following sources: o $370.0 million of borrowings by the Company under a Senior Term Loan Facility (collectively with a $75.0 million Revolving Credit Facility which is expected to be undrawn on the Closing Date (other than with respect to letters of credit issued thereunder), but not including any future incremental credit facility, the "CREDIT FACILITIES") among the Company, LCPI and the financial institutions party thereto; o approximately $57.3 million of existing cash balances from the Acquired Business and the Company; and o approximately $55.5 million in common equity of the Company. Following the Acquisition, neither the Company nor any of its subsidiaries will have any debt or preferred equity outstanding other than obligations under capital leases with aggregate balances below $3.0 million except as described in this paragraph. As used below, the defined term "Company" will mean both the Company prior to the Acquisition and the Company, together with the Acquired Business, after giving effect to the Acquisition. 1. The Senior Loan Commitment. (a) You have requested that LCPI (collectively with each other entity that becomes a lender under the Credit Facilities, the "SENIOR LENDERS") commit to provide the entire amount of the Credit Facilities upon the terms and subject to the conditions set forth or referred to in this Commitment Letter and in the Summary of Terms of Credit Facilities attached hereto as Exhibit A (the "CREDIT FACILITIES TERM SHEET"). (b) Based on the foregoing, LCPI is pleased to confirm by this Commitment Letter its commitment to you (the "SENIOR LOAN COMMITMENT"), to provide or cause one or more of its affiliates to provide the entire amount of the Credit Facilities. (c) It is agreed that the Arranger will act as the sole book-runner and sole arranger for the Credit Facilities and that LCPI will act as the sole and exclusive Administrative Agent (acting in such role, the "ADMINISTRATIVE AGENT") for the Credit Facilities. Each of the Arranger, the Administrative Agent and LCPI will have the rights and authority customarily given to financial institutions in such roles, but will have no duties other than those expressly set forth herein. You agree that no other agents, co-agents, arrangers or book-runners will be appointed, no other titles will be awarded and no compensation (other than that expressly contemplated by the Credit Facilities Term Sheet or the Fee Letter referred to below) will be paid in connection with the Credit Facilities unless you and we so agree. (d) The commitments and agreements of LCPI and the Arranger described herein are subject to (i) there not having occurred or become known to Lehman Brothers any event, development or circumstance since January 2, 2005 (the date of the most recent audited financial statements delivered to the Arranger as of the date hereof) that Lehman Brothers determines has caused or could reasonably be expected to cause a material adverse condition or material adverse change in or affecting (A) the Company or the Acquired Business's ability to perform their respective obligations under the Acquisition Agreement or consummate the Acquisition, (B) the business, properties, assets, liabilities (contingent or otherwise), results of operations or financial condition of the Company and its subsidiaries, taken as a whole, or the Acquired Business, taken as a whole, other than, in each case, any effect, change, event, occurrence or state of facts (x) relating to the economy in general or (y) relating to the industry in which the Company or the Acquired Business, as applicable, operates in general, not specifically relating to (or disproportionately affecting) the Company or the Acquired Business or (C) the validity or enforceability of any of the Credit Documentation (as defined in the Credit Facilities Term Sheet) or the rights and remedies of the Administrative Agent and the Senior Lenders thereunder, (ii) the Arranger not having become aware after the date hereof of any information or other matter affecting the Company, the Acquired Business or the transactions contemplated hereby that is inconsistent in a material and adverse manner with any information or other matter disclosed to the Arranger prior to the date hereof, (iii) the Arranger having been afforded a period of at least 30 consecutive days following the delivery of indicative ratings and the launch of the general syndication of the Credit Facilities and immediately prior to the Closing Date to syndicate the Credit Facilities, and (iv) the other conditions set forth below or referred to in the Funding Conditions attached hereto as Exhibit B. 2. Fees and Expenses. In consideration of the execution and delivery of this Commitment Letter by LCPI as a Senior Lender, you agree, jointly and severally, to pay the fees and expenses set forth in Annex A-I to the Credit Facilities Term Sheet and in the Fee Letter dated the date hereof (the "FEE LETTER") as and when payable in accordance with the terms thereof. 2 3. Indemnification. (a) The Company hereby agrees to indemnify and hold harmless each of LCPI, Lehman Brothers, the other Senior Lenders and each of their respective affiliates and all their respective officers, directors, partners, trustees, employees, shareholders, advisors, agents, attorneys and controlling persons and each of their respective heirs, successors and assigns (each, an "INDEMNIFIED PERSON") from and against any and all losses, claims, damages and liabilities to which any Indemnified Person may become subject arising out of or in connection with this Commitment Letter, the Credit Facilities, the use of the proceeds therefrom, the Acquisition, any of the other transactions contemplated by this Commitment Letter, any other transaction related thereto or any claim, litigation, investigation or proceeding relating to any of the foregoing, regardless of whether any Indemnified Person is a party thereto, and to reimburse each Indemnified Person promptly upon demand for all legal and other expenses reasonably incurred by it in connection with investigating, preparing to defend or defending, or providing evidence in or preparing to serve or serving as a witness with respect to, any lawsuit, investigation, claim or other proceeding relating to any of the foregoing (including, without limitation, in connection with the enforcement of the indemnification obligations set forth herein); provided, however, that no Indemnified Person will be entitled to indemnity hereunder in respect of any loss, claim, damage, liability or expense to the extent that it is found by a final, non-appealable judgment of a court of competent jurisdiction that such loss, claim, damage, liability or expense resulted directly from the gross negligence or willful misconduct of such Indemnified Person. In no event will any Indemnified Person be liable on any theory of liability for indirect, special or consequential damages, lost profits or punitive damages as a result of any failure to fund any of the Credit Facilities contemplated hereby or otherwise in connection with the Credit Facilities. No Indemnified Person will be liable for any damages arising from the use by unauthorized persons of information, projections or other materials sent through electronic, telecommunications or other information transmission systems that are intercepted by unauthorized persons. (b) The Company further agrees that, without the prior written consent of each of LCPI and Lehman Brothers, which consent will not be unreasonably withheld, it will not enter into any settlement of a lawsuit, claim or other proceeding arising out of this Commitment Letter or the transactions contemplated by this Commitment Letter unless such settlement includes an explicit and unconditional release from the party bringing such lawsuit, claim or other proceeding of all Indemnified Persons. 4. Expiration of Senior Loan Commitment. The Senior Loan Commitment will expire at 5:00 p.m., New York City time, on January 20, 2006 unless on or prior to such time you have executed and returned to Lehman Brothers a copy of this Commitment Letter and the Fee Letter. If you do so execute and deliver to Lehman Brothers this Commitment Letter and the Fee Letter, LCPI agrees to hold its Senior Loan Commitment available for you until the earlier of (i) the termination of the Acquisition Agreement, (ii) the consummation of the Acquisition with or without the funding of the Credit Facilities and (iii) 5:00 p.m., New York City time, on April 30, 2006. The Senior Loan Commitment will terminate on the Closing Date, and you agree to rely exclusively on your rights and the commitments set forth in the Credit Documentation in respect of all loans and extensions of credit to be made after the Closing Date. 5. Confidentiality. (a) This Commitment Letter and the terms and conditions contained herein may not be disclosed by the Company to any person or entity (other than the Acquired Business and such of your and their agents and advisors as need to know and agree to be bound by the provisions of this paragraph and as required by law) without the prior written consent of LCPI and the Arranger. The Fee 3 Letter and the terms and conditions contained therein may not be disclosed by the Company to any person or entity (other than such of your agents and advisors as need to know and agree to be bound by the provisions of this paragraph and as required by law) without the prior written consent of LCPI and the Arranger. (b) You acknowledge that Lehman Brothers and its affiliates (the term "LEHMAN BROTHERS," when used in this paragraph, includes all such affiliates, including LCPI) may be providing debt financing, equity capital or other services (including financial advisory services) to other companies in respect of which you may have conflicting interests regarding the transactions described herein and otherwise. Lehman Brothers will not use confidential information obtained from you by virtue of the transactions contemplated by this Commitment Letter or their other relationships with you in connection with the performance by Lehman Brothers of services for other companies, and Lehman Brothers will not furnish any such information to other companies. You also acknowledge that Lehman Brothers has no obligation to use in connection with the transactions contemplated by this Commitment Letter, or to furnish to you, confidential information obtained from other companies. 6. Assignment and Syndication. (a) The parties hereto agree that Lehman Brothers will have the right to syndicate the Credit Facilities and the Senior Loan Commitment to one or more groups of financial institutions or other investors, identified by us after consultation with you. Lehman Brothers will have the right to manage all aspects of any such syndication, including decisions as to the selection of institutions to be approached and when they will be approached, the acceptance of commitments, the amounts offered, the amounts allocated and the compensation provided. The Senior Loan Commitment is subject to the Company using all commercially reasonable efforts to assist Lehman Brothers in such syndication process, including, without limitation: (i) ensuring that the syndication efforts benefit from the existing lending relationships of the Company and the Acquired Business; (ii) arranging for direct contact between senior management and other representatives and advisors of the Company and the Acquired Business, and the proposed Senior Lenders; (iii) assisting in the preparation of Confidential Information Memoranda and other marketing materials to be used in connection with any syndication, including causing such Confidential Information Memoranda to conform to market standards as reasonably determined by Lehman Brothers and, at the request of Lehman Brothers, the preparation of versions of the Confidential Information Memoranda that do not contain material non-public information concerning the Company or the Acquired Business, their respective affiliates or their securities for purposes of United States federal and state securities laws; and (iv) hosting, with LCPI and Lehman Brothers, one or more meetings of prospective Senior Lenders, and, in connection with any such Senior Lender meeting, consulting with Lehman Brothers with respect to the presentations to be made at such meeting, and making available appropriate officers and representatives to rehearse such presentations prior to such meetings, as reasonably requested by Lehman Brothers. You also agree that, at your expense, you will work with Lehman Brothers to procure a rating for the Credit Facilities by Moody's Investors Service, Inc. ("MOODY'S") and Standard & Poor's Ratings Group ("S&P") prior to the commencement of the general syndication of the Credit Facilities. (b) To assist Lehman Brothers in its syndication efforts, you agree promptly to prepare and provide to Lehman Brothers such information with respect to the Company, the Acquired Business, the Acquisition and the other transactions contemplated hereby as it may reasonably request, including all financial information and projections as it may reasonably request, including a business plan for fiscal 2005 through fiscal 2012 and a written analysis of the business and prospects of the Company and its subsidiaries for such period, all in form and substance reasonably satisfactory to Lehman Brothers (the "PROJECTIONS"). You hereby represent and covenant that (i) all information other than the Projections (the "INFORMATION") that has been or will be made available to Lehman Brothers by you or any of your representatives is or will be, when furnished, complete and correct in all material respects and does not or will not, when furnished, contain any untrue statement of a material fact or omit to 4 state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made and (ii) the Projections that have been or will be made available to Lehman Brothers by you or any of your representatives have been or will be prepared in good faith based upon reasonable assumptions. You understand that in arranging and syndicating the Credit Facilities and the Senior Loan Commitment we may use and rely on the Information and Projections without independent verification thereof and that you will promptly notify us of any changes in circumstances that could be expected to call into question the continued reasonableness of any assumption underlying the Projections. (c) To ensure an orderly and effective syndication of the Credit Facilities and the Senior Loan Commitment, you agree that, from the date hereof until the earlier of the termination of the syndication as determined by Lehman Brothers and 90 days following the Closing Date, you will not, and will not permit any of your affiliates to, syndicate or issue, attempt to syndicate or issue, announce or authorize the announcement of the syndication or issuance of, or engage in discussions concerning the syndication or issuance of, any debt facility, or debt or preferred equity security of the Company or any of its subsidiaries (other than the syndication of the Credit Facilities as contemplated hereby), including any renewals or refinancings of any existing debt facility, without the prior written consent of Lehman Brothers. 7. Survival. The provisions of this Commitment Letter relating to the payment of fees and expenses, indemnification and contribution and confidentiality and the provisions of Sections 6 and 8 hereof will survive the expiration or termination of the Senior Loan Commitment or this Commitment Letter (including any extensions) and the execution and delivery of definitive financing documentation. 8. Choice of Law; Jurisdiction; Waivers. (a) This Commitment Letter will be governed by and construed in accordance with the laws of the State of New York. The Company hereby irrevocably submits to the non-exclusive jurisdiction of any New York State court or Federal court sitting in the County of New York in respect of any suit, action or proceeding arising out of or relating to the provisions of this Commitment Letter or the Fee Letter and irrevocably agrees that all claims in respect of any such suit, action or proceeding may be heard and determined in any such court. The parties hereto hereby waive any objection that they may now or hereafter have to the laying of venue of any such suit, action or proceeding brought in any such court, and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. THE PARTIES HERETO HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS COMMITMENT LETTER OR THE FEE LETTER. (b) No Senior Lender will be liable in any respect for any of the obligations or liabilities of any other Senior Lender under this letter or arising from or relating to the transactions contemplated hereby. 9. Miscellaneous. (a) This Commitment Letter may be executed in one or more counterparts, each of which will be deemed an original, but all of which taken together will constitute one and the same instrument. Delivery of an executed signature page of this Commitment Letter by facsimile transmission will be effective as delivery of a manually executed counterpart hereof. This Commitment Letter may not be amended or waived except by an instrument in writing signed by Lehman Brothers, LCPI and you. 5 (b) The Company may not assign any of its rights, or be relieved of any of its obligations, without the prior written consent of each of the Senior Lenders (and any purported assignment without such consent will be null and void). In connection with any syndication of all or a portion of the Senior Loan Commitment, the rights and obligations of each Senior Lender hereunder may be assigned, in whole or in part, and upon such assignment and assumption by the assignee of all obligations of such Senior Lender in respect of the portion of the Senior Loan Commitment so assigned on the terms set forth in this Commitment Letter or on the terms set forth in the definitive financing documents, such Senior Lender will be relieved and novated hereunder from its obligations with respect to such portion of the Senior Loan Commitment. (c) This Commitment Letter and the attached Exhibits and Schedules set forth the entire understanding of the parties hereto as to the scope of the Senior Loan Commitment and the obligations of the Senior Lenders and Lehman Brothers hereunder. This Commitment Letter supersedes all prior understandings and proposals, whether written or oral, between any of the Senior Lenders and you relating to any financing or the transactions contemplated hereby. This Commitment Letter is in addition to the agreements of the parties contained in the Fee Letter. (d) This Commitment Letter has been and is made solely for the benefit of the parties signatory hereto, the Indemnified Persons, and their respective heirs, successors and assigns, and nothing in this Commitment Letter, expressed or implied, is intended to confer or does confer on any other person or entity any rights or remedies under or by reason of this Commitment Letter or the agreements of the parties contained herein. (e) You acknowledge that the Senior Lenders and Lehman Brothers may be (or may be affiliated with) full service financial firms and as such from time to time may effect transactions for their own account or the account of customers, and hold long or short positions in debt or equity securities or loans of companies that may be the subject of the transactions contemplated by this Commitment Letter. You hereby waive and release, to the fullest extent permitted by law, any claims you have with respect to any conflict of interest arising from such transactions, activities, investments or holdings, or arising from the failure of LCPI, Lehman Brothers or one or more Senior Lenders or any of their respective affiliates to bring such transactions, activities, investments or holdings to your attention. (f) Lehman Brothers also will provide financial advisory services to the Company with respect to the transaction to which this Commitment Letter relates. The Company agrees that Lehman Brothers has the right to place advertisements in financial and other newspapers and journals at its own expense describing its services to the Company; provided that Lehman Brothers will submit a copy of any such advertisements to the Company for its approval, which approval will not be unreasonably withheld or delayed. (g) You agree to provide us, prior to the Closing Date, with all documentation and other information required by bank regulatory authorities under applicable "know your customer" and anti-money laundering rules and regulations, including, without limitation, the U.S.A. Patriot Act. [Remainder of page intentionally left blank] 6 EXECUTION COPY If you are in agreement with the foregoing, kindly sign and return to us the enclosed copy of this Commitment Letter. Very truly yours, LEHMAN COMMERCIAL PAPER INC. By: /s/ Jeffrey Abt -------------------------------------- Name: Jeffrey Abt Title: Authorized Signatory LEHMAN BROTHERS INC. By: /s/ Jeffrey Abt -------------------------------------- Name: Jeffrey Abt Title: Managing Director Accepted and agreed to as of the date first above written: GENTIVA HEALTH SERVICES, INC. By: /s/ John R. Potapchuk ------------------------------- Name:John R. Potapchuk Title: Senior Vice President & Chief Financial Officer Gentiva Commitment Letter Signature Page EXECUTION COPY EXHIBIT A TO COMMITMENT LETTER ------------------------------ SUMMARY OF TERMS OF CREDIT FACILITIES ------------------------------------- Set forth below is a summary of certain of the terms of the Credit Facilities and the documentation related thereto. Capitalized terms used and not otherwise defined herein have the meanings set forth in the Commitment Letter to which this Summary of Terms is attached and of which it forms a part. I. PARTIES ------- BORROWER..................... Gentiva Health Services, Inc., a Delaware corporation (the "COMPANY"). GUARANTORS................... Each of the Company's direct and indirect subsidiaries (other than foreign subsidiaries of the Company) (the "GUARANTORS"; the Company and the Guarantors, collectively, the "CREDIT PARTIES"). SOLE ARRANGER AND SOLE BOOK-RUNNER............. Lehman Brothers Inc. (in such capacity, the "ARRANGER"). SYNDICATION AGENT............ An entity to be designated by the Arranger (in such capacity, the "SYNDICATION AGENT"). DOCUMENTATION AGENT.......... An entity to be designated by the Arranger (in such capacity, the "DOCUMENTATION AGENT"). ADMINISTRATIVE AGENT......... Lehman Commercial Paper Inc. (in such capacity, the "ADMINISTRATIVE AGENT"). SENIOR LENDERS............... A syndicate of banks, financial institutions and other entities arranged by the Arranger (collectively, the "SENIOR LENDERS"). II. TYPES AND AMOUNTS OF CREDIT FACILITIES -------------------------------------- SENIOR TERM LOAN FACILITY.... Seven-year senior term loan facility (the "SENIOR TERM LOAN FACILITY") in an aggregate principal amount equal to $370.0 million (the loans thereunder, the "TERM LOANS"). The Term Loans will be repayable in quarterly installments equal to 1% per annum, with the remaining balance due on maturity. Availability........... The Term Loans will be made in a single drawing on the Closing Date. Purpose................ The proceeds of the Term Loans will be used to finance, in part, the Acquisition, to refinance certain existing indebtedness of the Acquired Business and to pay related fees and expenses. REVOLVING CREDIT FACILITY.... Six-year revolving credit facility (the "REVOLVING CREDIT FACILITY"; together with the Senior Term Loan Facility, the "CREDIT FACILITIES") in an aggregate principal amount equal to $75.0 million (the loans thereunder, the "REVOLVING CREDIT LOANS"). A-1 Availability........... The Revolving Credit Facility will be available on a revolving basis during the period commencing on the day after the Closing Date and ending on the sixth anniversary of the Closing Date (the "REVOLVING CREDIT TERMINATION DATE"). Increased Availability........... The Company will have the right to solicit commitments for a pre-approved (but not pre-committed) increase of up to $25.0 million in the Revolving Credit Facility. Such increases in the Revolving Credit Facility may be provided by existing Senior Lenders or other persons who become Senior Lenders in connection therewith and will be subject to customary price protection. No Senior Lender will be obligated to provide any such increase. Letters of Credit ..... A portion of the Revolving Credit Facility not in excess of $55.0 million will be available for the issuance of letters of credit (the "LETTERS OF CREDIT") by one or more Senior Lenders to be selected in the syndication process (each such Senior Lender in such capacity, an "ISSUING SENIOR LENDER"). The face amount of any outstanding Letters of Credit will reduce availability under the Revolving Credit Facility on a dollar-for-dollar basis. No Letter of Credit will have an expiration date after the earlier of (i) one year after the date of issuance, unless the Issuing Senior Lender otherwise agrees, and (ii) five business days prior to the Revolving Credit Termination Date. Drawings under any Letter of Credit will be reimbursed by the Company (whether with its own funds or with the proceeds of Revolving Credit Loans) on the next business day. Each Senior Lender under the Revolving Credit Facility will acquire an irrevocable and unconditional pro rata participation in each Letter of Credit. Swing Line Loans....... A portion of the Revolving Credit Facility not in excess of an amount to be agreed will be available for swing line loans (the "SWING LINE LOANS") from Lehman Commercial Paper Inc. (in such capacity, the "SWING LINE SENIOR LENDER") on same-day notice. Any such Swing Line Loans will reduce availability under the Revolving Credit Facility on a dollar-for-dollar basis. Each Senior Lender under the Revolving Credit Facility will acquire an irrevocable and unconditional pro rata participation in each Swing Line Loan. Maturity............... The Revolving Credit Termination Date. A-2 PURPOSE.................... The proceeds of the Revolving Credit Loans will be used to finance the working capital needs and for other general corporate purposes of the Company and its subsidiaries. III. CERTAIN PAYMENT PROVISIONS -------------------------- FEES AND INTEREST RATES.......... As set forth on Annex A-I. OPTIONAL PREPAYMENTS AND COMMITMENT REDUCTIONS...... Loans may be prepaid and commitments under the Revolving Credit Facility may be reduced, in each case, in minimum amounts to be agreed upon, at any time, without premium or penalty (other than customary indemnification for "breakage costs" incurred in connection with a prepayment of Loans on a day other than the last day of an interest period with respect thereto). Optional prepayments of the Term Loans will be applied to the installments thereof, first in direct order of maturity for eight amortization payments and thereafter, ratably in accordance with the then outstanding amounts thereof and may not be reborrowed. MANDATORY PREPAYMENTS AND COMMITMENT REDUCTIONS ..... The following amounts will be applied to prepay the Term Loans, provided that prior to applying the provisions outlined below with respect to the prepayment of Term Loans, the Company may, at its option, use such net proceeds or excess cash flow to repay any outstanding Revolving Credit Loans: (i) 50% of the net proceeds of any sale or issuance of equity (other than issuances pursuant to employee stock plans) after the Closing Date by the Company, reducing to zero percent of such net proceeds if, at the time of such sale or issuance, the consolidated total leverage ratio of the Company and its subsidiaries is less than 3.0 to 1.0; (ii) 100% of the net proceeds of any issuance or incurrence of indebtedness (other than indebtedness otherwise permitted under the Credit Documentation (as defined below)) after the Closing Date by the Company or any of its subsidiaries; (iii) 100% of the net proceeds of any sale or other disposition (including as a result of casualty or condemnation) by the Company or any of its subsidiaries of any assets with exceptions for proceeds that are re-invested within 180 days in capital assets or permitted acquisitions (except for the sale of inventory in the ordinary course of business and certain other dispositions to be agreed upon); and A-3 (iv) 50% (reducing to zero percent if the consolidated total leverage ratio of the Company and its subsidiaries as of the applicable fiscal year end is less than 3.0 to 1.0) of excess cash flow (to be defined in a mutually satisfactory manner) for each fiscal year of the Company (commencing with the fiscal year in which the Closing Date occurs). All such amounts will be applied to the prepayment of the Term Loans. Each such prepayment of the Term Loans will be applied to the installments thereof, first in direct order of maturity for eight amortization payments and thereafter, ratably in accordance with the then outstanding amounts thereof and may not be reborrowed. IV. COLLATERAL The obligations of each Credit Party in respect ---------- of the Credit Facilities and certain interest rate hedge agreements provided by affiliates of the Senior Lenders will be secured by a perfected first priority security interest (subject to permitted liens) in all of its tangible and intangible assets (including, without limitation, intellectual property, owned real property, licenses, permits and all of the capital stock of the Company and each of its direct and indirect domestic subsidiaries and 65% of the voting stock and 100% of the non-voting stock of certain of its first-tier foreign subsidiaries), except for those assets as to which the Arranger determines, in its sole discretion, that the costs of obtaining such a security interest are excessive in relation to the value of the security to be afforded thereby. V. CERTAIN CONDITIONS ------------------ INITIAL CONDITIONS....... The availability of the Credit Facilities is subject to the conditions set forth on Exhibit B to the Commitment Letter. ON-GOING CONDITIONS...... The making of each extension of credit will be conditioned upon (i) the accuracy of all representations and warranties in the definitive financing documentation with respect to the Credit Facilities (the "CREDIT DOCUMENTATION") (including, without limitation, the material adverse change and litigation representations) and (ii) there being no default or event of default in existence at the time of, or after giving effect to the making of, such extension of credit. A-4 VI. CERTAIN DOCUMENTATION MATTERS The Credit Documentation will ----------------------------- contain representations, warranties, covenants and events of default customary for financings of this type and other terms deemed appropriate by the Senior Lenders, including, without limitation: REPRESENTATIONS AND WARRANTIES........ Financial statements (including pro forma financial statements); absence of undisclosed liabilities; no material adverse change; corporate existence; compliance with law; corporate power and authority; enforceability of Credit Documentation; no conflict with law or contractual obligations; no material litigation; no default; ownership of property; indebtedness; liens; intellectual property; taxes; Federal Reserve regulations; ERISA; Investment Company Act; licenses; permits; regulatory approvals; subsidiaries; environmental matters; healthcare matters, solvency; labor matters; accuracy of disclosure; and creation and perfection of security interests. AFFIRMATIVE COVENANTS.............. Delivery of financial statements, reports, accountants' letters, projections, budgets and business plan, officers' certificates and other information requested by the Senior Lenders; payment of other obligations; continuation of business and maintenance of existence and material rights and privileges; compliance with laws and material contractual obligations; maintenance of property and insurance; maintenance of books and records; right of the Senior Lenders to inspect property and books and records; notices of defaults, litigation and other material events; compliance with environmental laws; compliance with healthcare laws and further assurances (including, without limitation, with respect to security interests in after-acquired property). FINANCIAL COVENANTS................ Financial covenants (including, without limitation, minimum interest coverage ratio and maximum total leverage ratio). NEGATIVE COVENANTS................. Limitations on: indebtedness (including preferred stock); liens; guarantee obligations; mergers and acquisitions, consolidations, liquidations and dissolutions; sales of assets; leases; dividends and other payments in respect of capital stock; capital expenditures; investments, loans and advances; optional payments and modifications of subordinated and other debt instruments; amendments to material contracts; transactions with affiliates; sale and leasebacks; changes in fiscal year; negative pledge clauses; and changes in lines of business. EVENTS OF DEFAULT.................. Nonpayment of principal when due; nonpayment of interest, fees or other amounts after a grace period to be agreed upon; material inaccuracy of representations and warranties; violation of covenants (subject, in the case of certain affirmative covenants, to a grace period to be agreed upon); cross-default; bankruptcy events; certain ERISA events; material judgments; actual or asserted invalidity of any guarantee or security document or security interest; and a change of control (the definition of which is to be agreed). A-5 VOTING............................. Amendments and waivers with respect to the Credit Documentation will require the approval of Senior Lenders holding not less than a majority of the aggregate amount of the Term Loans, Revolving Credit Loans (including participations in Letters of Credit and Swing Line Loans) and unused commitments under the Credit Facilities, except that (i) the consent of each Senior Lender directly and adversely affected thereby will be required with respect to (a) reductions in the amount or extensions of the scheduled date of amortization or final maturity of any loan, (b) reductions in the rate of interest or any fee or extensions of any due date thereof, (c) increases in the amount or extensions of the expiry date of any Senior Lender's commitment, (d) modifications to the pro rata provisions of the Credit Documentation or (e) modifications to the assignment and participation provisions of the Credit Documentation which further restrict assignments thereunder and (ii) the consent of 100% of the Senior Lenders will be required with respect to (a) modifications to any of the voting percentages and (b) releases of all or substantially all of the collateral or all or substantially all of the Guarantees other than in accordance with the provisions of the Credit Documentation. In addition, the consent of Senior Lenders holding a majority of the aggregate amount of the funded and unfunded commitments under a Credit Facility will be required with respect to certain modifications disproportionately affecting such Credit Facility. ASSIGNMENTS AND PARTICIPATIONS..... Each Senior Lender may assign any or all of its loans and commitments to its affiliates or to one or more banks, financial institutions or other entities. Except for assignments (i) by or to the Arranger and its affiliates, (ii) to another Senior Lender or to an affiliate of a Senior Lender or (iii) of funded Term Loans, assignments will require the consent of the Administrative Agent and, so long as no default or event of default has occurred and is continuing, the Company (which consent in each case will not be unreasonably withheld or delayed). Non-pro rata assignments will be permitted. Partial assignments (other than to another Senior Lender or to an affiliate of a Senior Lender), must be at least $1.0 million unless otherwise agreed by the Company and the Administrative Agent. Upon assignment, the assignee will become a Senior Lender for all purposes under the Credit Documentation under documentation reasonably acceptable to the Administrative Agent. Promissory notes will be issued under the Credit Facilities only upon request. A-6 YIELD PROTECTION................... The Credit Documentation will contain customary provisions (i) protecting the Senior Lenders against increased costs or loss of yield resulting from changes in reserve, tax, capital adequacy and other requirements of law and from the imposition of or changes in withholding or other taxes and (ii) indemnifying the Senior Lenders for "breakage costs" incurred in connection with, among other things, any prepayment of a LIBOR Loan (as defined in Annex A-I) on a day other than the last day of an interest period with respect thereto. EXPENSES AND INDEMNIFICATION ...... The Company will pay (i) all reasonable out-of-pocket expenses of the Administrative Agent and the Arranger associated with the syndication of the Credit Facilities and the preparation, negotiation, execution, delivery and administration of the Credit Documentation and any amendment or waiver with respect thereto (including the reasonable fees, disbursements and other charges of counsel and the charges of IntraLinks) and (ii) all out-of-pocket expenses of the Administrative Agent and the Senior Lenders (including the fees, disbursements and other charges of counsel) in connection with the enforcement of the Credit Documentation or in any bankruptcy case or insolvency proceeding. The Administrative Agent, the Syndication Agent, the Arranger and the Senior Lenders (and their affiliates and each of their respective officers, directors, partners, trustees, employees, shareholders, advisors, agents, attorneys and controlling persons and each of their respective heirs, successors and assigns) will have no liability for, and will be indemnified and held harmless against, any loss, liability, cost or expense incurred in respect of the financing contemplated hereby or the use or the proposed use of proceeds thereof (except to the extent resulting from the gross negligence or willful misconduct of the indemnified party). GOVERNING LAW AND FORUM........... State of New York. COUNSEL TO THE ADMINISTRATIVE AGENT AND THE ARRANGER............. Latham & Watkins LLP. A-7 EXECUTION COPY Annex A-I [Omitted] A-8 EXECUTION COPY EXHIBIT B TO COMMITMENT LETTER ------------------------------ FUNDING CONDITIONS ------------------ Capitalized terms used but not defined herein have the meanings assigned to them in the Commitment Letter to which this Exhibit B is attached and of which it forms a part. The availability of the Credit Facilities is conditioned upon satisfaction of, among other things, the conditions precedent summarized below. (a) Each Credit Party shall have executed and delivered definitive financing documentation with respect to the Credit Facilities satisfactory to the Administrative Agent, the Arranger and their counsel. (b) There shall not exist (pro forma for the Acquisition and the financing thereof) any default or event of default under the Credit Facilities or under any other material indebtedness or agreement of the Company or the Acquired Business. (c) The Company shall have issued $55.5 million of its common stock to the shareholders of the Acquired Business, on terms reasonably satisfactory to the Arranger. The Capital Structure of the Company and its subsidiaries after the Acquisition shall be as described in the Commitment Letter and otherwise reasonably satisfactory to the Arranger. (d) The Acquisition shall have been consummated for an aggregate purchase price not exceeding $482.8 million (including fees and expenses not exceeding $22.0 million in the aggregate) pursuant to documentation satisfactory to the Arranger, and no material provision thereof shall have been waived, amended, supplemented or otherwise modified without the consent of the Arranger; it being understood and agreed that the draft Acquisition Agreement dated January 4, 2006 is acceptable to the Arranger. (e) The Company shall have complied with all of its obligations under and agreements in the Commitment Letter and the Fee Letter. (f) All governmental, regulatory and third party approvals necessary or, in the discretion of the Arranger, advisable in connection with the Acquisition, the financing contemplated hereby and the continuing operations of the Company and its subsidiaries shall have been obtained and be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority that could reasonably be expected to restrain, prevent or otherwise impose adverse conditions on the Acquisition or the financing thereof. (g) The Arranger shall have received audited and unaudited (which shall have been reviewed by the independent accountants for the Company as provided in Statement on Auditing Standards No. 100) financial statements of the Company, the Guarantors and the Acquired Business and all other completed or probable acquisitions (including pro forma financial statements) meeting the requirements of Regulation S-X for a Form S-1 registration statement under the Securities Act of 1933, as amended and copy of the most recent internal financial projections with respect to fiscal year 2005 for each of the Company and the Acquired Business, and all such financial statements and projections must be satisfactory in form to the Arranger in its sole discretion. Such financial statements shall show a pro forma ratio of total funded debt to pro forma consolidated EBITDA of the Company (calculated in accordance with Regulation S-X and including only those adjustments the Arranger agrees are appropriate) for the most recent twelve-month period for which internal financial statements are available, of no more than 4.50:1.00. B-1 (h) The Arranger shall have received the results of recent lien searches with respect to the Company and the Acquired Business, and such searches shall not reveal any liens other than liens permitted by the Credit Documentation or liens to be discharged substantially concurrently with the closing of the Credit Facilities pursuant to documentation satisfactory to the Arranger. (i) The Senior Lenders shall have received a customary solvency certificate from the Company's chief financial officer as to the solvency of the Company and such legal opinions from counsel to the Company (including, where appropriate, local counsel) as the Arranger may reasonably request. B-2